Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Support for capital gains tax misguided

Support for capital gains tax misguided


Nearly half of the respondents to TV One’s Vote Compass survey supported a Capital Gains Tax (CGT). This is hardly surprising given the information presented to them.

“Most people believe that rental property owners don't pay any tax and they are the prime reason for property price increases. But this isn't true” said Andrew King, Executive Officer of the NZ Property Investors’ Federation. “This graph, using Inland Revenue data, shows that rental property owners do pay tax on their rental earnings."

In addition, most people would believe that a CGT would lower house prices, provide opportunities for other taxes to be reduced and would only apply to speculators. However overseas experience of CGT is that it has no effect on house price growth and provides minimal tax revenue. The CGT would not apply to speculators as their capital gains are already taxed. Inland Revenue has a highly successful property unit tasked with making sure property speculators pay their fair due.

What people are unlikely to know, is that a CGT, as proposed by Labour, would affect all investments except the family home. This means farms, businesses, shares etc would all have to pay this tax.

The consequences of a CGT are also unlikely to be known by many. The fact is that lack of a CGT lowers the cost of renting. Currently it is $135pw cheaper to rent than own the average New Zealand home. This means there is room for rental prices to rise as the only options to renting are owning your home or moving in with others to keep costs down. In other words, a CGT would mean rising rental prices for most and overcrowding for some.

As a CGT will affect businesses and farms, the cost is likely to be passed onto consumers through higher prices and hinder our overseas competitiveness.
In summary, a CGT won't reduce property prices and will raise little revenue. It will increase rental and other prices making it harder for first home buyers to save a deposit.

If a CGT was the easy solution for everything it would have been implemented years ago. The biggest risk is that when it doesn't produce the expected revenue, then it will be applied to the family home.

If respondents to the Vote Compass survey were actually aware of the consequences, it is unlikely that nearly half of them would want to see it introduced.

ENDS

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Negotiations Fail: Christchurch Convention Centre Build To Proceed Without PCNZ

After protracted negotiations, the government has ditched the construction consortium it picked to build Christchurch's replacement convention centre, which it now anticipates delivering at least two years behind the original schedule. More>>

ALSO:

Ruataniwha: Greenpeace Launches Legal Challenge Against $1b Dam Plan

Greenpeace NZ is launching a legal challenge against a controversial plan to build a dam that’s set to cost close to $1 billion and will pollute a region’s rivers. More>>

ALSO:

Inequality: Top 10% Of Housholds Have Half Of Total Net Worth

The average New Zealand household was worth $289,000 in the year to June 2015, Statistics New Zealand said today. However wealth was not evenly distributed, with the top 10 percent accounting for around half of total wealth. In contrast, the bottom 40 percent held 3 percent of total wealth. More>>

ALSO:

What Winter? Temperature Records Set For June 20-22

The days around the winter soltice produced a number of notably warm tempertaures. More>>

Conservation Deal: New Kākāpō Recovery Partnership Welcomed

Conservation Minister Maggie Barry says the new kakapo recovery partnership between DOC and Meridian Energy is great news for efforts to save one of New Zealand’s most beloved birds. More>>

ALSO:

Tech Sector Report: Joyce Warns Asian Tech Investors View NZ As Hobbits And Food

Speaking in Wellington at the launch of a report showcasing the value of the technology sector to the New Zealand economy, Joyce said more had to be done to tell the country's technology stories overseas. More>>

ALSO:

Mediaglommeration: APN Gets OIO Approval For Demerger Plan

APN News & Media has received Overseas Investment Office approval for its plan to split out its NZME unit ahead of a potential merger with rival Fairfax Media's New Zealand operations. More>>

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news